Evaluating the ACP’s Vision for Our Healthcare System, Part 2 of 3: Healthcare Delivery and Payment Systems

Read the intro to the series here and Part 1 here.

These posts should start to be more reliably out on Tuesday mornings again soon, but for now I’m excited to get this one out at all.

And in other news, this week marks the blog’s 10th anniversary! It started over at studenthealthpolicy.wordpress.com and then I changed the URL to clearthinkingonhealthcare.com a couple years ago (not something I recommend–it killed my traffic!). My first post was one paragraph long, and I hope I haven’t strayed too far from that original goal to be understandable to the masses as my knowledge has increased. I do know I make more and more assumptions of my readers’ knowledge, which is necessary so I’m not re-explaining everything a million times, but to compensate I try to refer back to the posts that explain those things. I’m interested to see where this blog is and where my knowledge is in another 10 years!

Ok, on to the next ACP paper! I hope you read last week’s post. It’s prerequisite material for everything in this post. Another prerequisite post (linked to in last week’s post as well) explains the spectrum that has fee for service at one end and full capitation at the other end. With the information from those two posts fresh in your mind, everything below will make much more sense.

The overall approach the ACP is taking here is to say that value-based purchasing (VBP) efforts can be great, but the ones we’ve tried to date have not been very effective because they have been fragmented (we’ve been trying lots of different and overlapping ones, all with their own flaws) and because they have been built on a FFS foundation that is often “at odds with goals to reward quality and efficiency.”

So what do they propose instead? They outline 6 “policy positions and recommendations.” I will not talk about each one because, frankly, I don’t know what I would say about some of them. For example, take the first one: “The American College of Physicians recommends that value must always be defined with patients and families at the center, fully empowered to be active partners in all aspects of their care.” That sounds like a great idea that is just ambiguous enough that no one could argue with it! But, to their credit, they do list some ideas in the following paragraphs of how to make that happen.

Their second recommendation is so good that I’m going to put it in the special quotation format:

The American College of Physicians recommends that all patients, families, and caregivers and their clinical care teams be provided with transparent, understandable, actionable, and evidence-based quality, cost, and price information to meaningfully compare medical services, facilities, and products.

Envisioning a Better U.S. Health Care System for All: Health Care Delivery and Payment System Reforms

Yes. This is super important. I love that they included it because the only effective way to financially reward higher-value providers and insurers is to get more patients to choose them. I think I do this almost every week, but I’ll link again to my Healthcare Incentives Framework series that explains this in detail.

Their third recommendation is all about what they would propose to replace the VBP efforts our healthcare system has made to date, and it’s the meat of what I am interested in. They envision teams of caregivers (led by physicians) treating patients, and they want those teams to determine for themselves which VBP strategy to employ from a menu of VBP options. The teams get to choose the VBP option that best fits their specialty and patients’ needs.

The three items on their recommended VBP menu are capitation, patient-centered medical homes, and direct primary care.

They specifically call out accountable care organizations (ACOs) as being less desirable because getting the shared savings bonuses is a moving target from year to year, so already-successful providers have a hard time improving sufficiently to continue getting them. They must take issue with Medicare’s specific implementation of ACOs, because then immediately after saying all that they describe the first menu item–capitation–as a shared-savings approach that should also have quality bonuses (ahem, that’s what an ACO is).

I’ve written less about direct primary care, but it’s simply a narrower form of capitation. The “capitated fee” (fixed monthly fee) patients pay covers all their primary care needs and nothing else. This eliminates all issues with insurer billing! Patients just go to or call the doctor when an issue comes up, and the doctor deals with it in whatever way makes the most sense without having to worry about charging for an office visit or phone call or anything.

So here we have three options on the ACP’s menu that they feel will be the new shiny way of doing VBP that gets rid of fee for service. One is actually still primarily relying on fee for service but pays providers bonuses for reorganizing in ways that decrease spending (patient-centered medical homes), and the other two are actually going away from fee for service and instead relying on some degree of capitation. I’ve talked about how important it is to make sure patients are buying the right breadth of services for each situation, and I don’t think the writers were aware of that principle, but they’re on the right track anyway.

Let’s frame the evaluation of these second and third recommendations by remembering that total healthcare expenditures is determined by (1) the number of care episodes and (2) the cost per care episode.

The ACP has done an admirable job addressing the number of care episodes (primarily by recommending shifting risk to providers, which is an appropriate way for an insurer to pass along the incentive to reduce care costs) AND the cost per care episode (by recommending increased transparency to help patients choose higher-value providers). These two recommendations are not perfect. For example, the ACP still seems to overvalue the benefits of quality bonuses. And they say nothing of many other significant details such as the insurance plan design changes that would also be necessary to get patients to choose higher-value providers. But I am still impressed. If you look back at my Healthcare Incentives Framework, you will see that they have essentially followed the main points of it.

The other recommendations talk about increasing pay for complex cognitive care relative to procedures, decreasing administrative burden (such as billing complexity, which is a huge problem that I have written about recently here and here and here), improving quality metrics (which they unfortunately seem to focus on using for quality bonuses rather than for helping patients determine the highest-value options), and health IT improvements (to facilitate all the other changes recommended in the paper). All these recommendations are interesting and I generally agree with them, but they are peripheral to the issues discussed in the second and third recommendations, so I won’t go into them.

There you have it. The ACP did a good job. Hats off to them. In Part 3, we’ll see if their recommendations to improve coverage and cost of care would interfere with what we talked about here.

Context for what “Value-based Purchasing” (VBP) Really Is About

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As I was reading through the ACP’s “Health Care Delivery and Payment System Reforms” paper this week, I was thinking more about the principles underlying this whole “value-based purchasing” (VBP) thing. So, before we delve into the ACP’s opinions on the topic, I thought it would be helpful to give a little context about what VBP really is.

I’ve written about these topics before here and here, and those posts describe somewhat different aspects of VBP and fee for service than what I’m talking about today.

The stated goals of VBP boil down to two things: (1) reward (and thereby improve) value and (2) decrease healthcare spending. If you’re familiar with my Healthcare Incentives Framework, you know I think trying to give providers bonuses for delivering better quality is not a transformational nor a sustainable effort. But what of the goal to decrease spending? Let’s talk about that for just a minute.

Question: Who stands to gain (or, save) the most if healthcare spending goes down? Answer: The person on the hook for paying for it. Paying for healthcare is a shared responsibility between the patient and the insurer, but really the risk for having to cover large healthcare expenditures resides with the insurer. (Yeah, that’s the point of insurance.)

So, if insurers are the ones that stand to benefit the most if healthcare costs go down*, what can they do to make that happen? They don’t directly control what providers do, but can they financially incentivize those providers somehow to find ways to decrease healthcare spending for them?

Yes. That’s what VPB is. And that primarily takes two forms:

First, they can simply pay them extra to reorganize in certain ways that would decrease spending. The insurer hopes the additional investment will result in a lot more savings than they invested. So, an example of this would be when insurers give clinics extra money when they offer expanded services such as after-hours access to doctors, social workers, and care coordinators. Think: patient-centered medical home.

Second, they can shift some of the risk to providers, so providers will make more money if they successfully decrease spending but will also make less money if spending increases. Think: Any “shared savings” plan, such as an ACO.

Now when we talk more about VBP, you will see these two tactics at work. Really, these are the only two tactics insurers can use, so every VBP model is some variation of one or both of them.

*There are some complicating factors in that statement. One is that with the ACA’s medical loss ratio restrictions, they actually don’t stand to gain much if they find a way to decrease medical spending, because they’re required to turn around and send a lof of that extra money they saved back to their enrollees in the form of rebates. It messes with insurers’ incentives to lower the cost of care, and this is one of the many reasons I despise those regulations. Another complicating factor is that insurers make a large amount of their profits (if anyone knows a specific number, I’m all ears) off the stock market by investing the premium money until they need to pull that money back out of those investments and pay for care. So, the more they get paid in premiums, the more they have available to invest in the interim. If all insurers could collude and find a way to keep healthcare super expensive, they would be tempted to do that, especially if they could keep premiums high AND decrease spending at the same time (and keep 100% of the difference). However, that is not a Nash equilibrium–there’s an incentive for someone to cheat the others and make more money than their competitors by lowering premiums and winning all the market share–so I don’t expect it to be a lasting thing even if it is happening informally in certain markets at certain times.

Evaluating the ACP’s Vision for Our Healthcare System, Part 1 of 3: Barriers to Care and Social Determinants

I am back from my blogging hiatus, and I’m excited to write about the three papers the ACP released earlier this year about how they think healthcare should be fixed!

I gave an intro to this series here, which basically gives the caveats about whose opinions these papers–written by the second largest physician organization in the U.S.–do and do not represent. Now, let’s get into it.

This is the paper where the ACP lays out their recommended solutions to issues related to non-financial barriers to care and social determinants of health. And in case you didn’t already know, I say “non-financial barriers to care” because even people with good insurance coverage that has affordable out-of-pocket requirements can still have many barriers to care. That’s what we call “coverage without access.”

This paper first reviews some of the evidence on a number of public health issues (nutrition, tobacco use, substance use, maternal mortality, firearm injuries and deaths, environmental health and climate change), and then it reviews the main non-financial barriers to care (race and ethnicity, LGBTQIA identity, gender, physical and intellectual disability, location, age, language and citizenship status, incarceration status, religion and beliefs, health literacy, intersectional barriers).

Next, it gives policy position statements and each one is followed by some policy recommendations, so let’s look at each one in turn:

  1. This one says that all people should have equitable access to high-quality care and that none of those non-financial barriers to care should impact that. Then they recommend that policies be put in place to focus on minimizing those non-financial barriers to care. They don’t actually give a set of specific policy recommendations on which ones to prioritize or how to do it, but they do reference a few other ACP papers that give more specifics in certain areas. So, this first one is a nice safe policy statement without any real substance on how to make a difference.
  2. This one says that we need to do a better job ensuring there are enough physicians and hospitals overall and in underserved areas. And it actually gives a few specifics. Notably, the ACP thinks there should be more internists! They want residency spots increased, and they want more programs that support medical trainees to choose primary care and to serve in underserved areas. They also make a general statement about wanting there to be more effort put into ensuring rural and critical access hospitals are available. And they again reference a number of different existing ACP papers that go into detail in a number of those areas.
  3. This one says that they want more public health research and more policy interventions that address social determinants of health. Then, again they simply reference other ACP papers for specifics.
  4. This one says that we need to devote more resources to environmental health and climate change. And, again, without any specifics here, they reference other ACP papers.
  5. This one lists the most “critical” public health objectives that the ACP thinks we should focus our time and money on the most, which are tobacco use, substance use, maternal mortality, firearm-related injuries and deaths, and access to high-quality food. It references APC papers on the subjects that already have papers, and it recommends more research in the other areas.

Well, I admit I am underwhelmed at the substance here. And yet, even though I expected this paper to offer more specifics that I could evaluate, it does do a good job of organizing the issues and putting the other existing ACP papers into context. My only comment, then, will be that all of these policies fit into the “equitable access” category of my Healthcare Incentives Framework. (Sure, some will take issue with my “equitable access” terminology not being broad enough, and I will let them.) Policy responses to these issues should be pursued in each country to the extent that each society deems appropriate, and when the designers of the policies understand the rest of the Healthcare Incentives Framework, they will be empowered to implement those policies in ways that do not interfere with the long-term value improvement of their healthcare system.

We will see what the other two papers (Part 2 here, Part 3 here) have to offer in the coming weeks.

Brief Hiatus

No blog post last week, no post this week. I haven’t forgotten. The weekly Tuesday posts will resume either next week or the week after, and at that time we will get into evaluating the ACP’s papers on how to fix healthcare. Looking forward to it!

Now the American College of Physicians Wants to Fix Healthcare, Too

This is the intro to a series. See Part 1 here, the context to Part 2 here, Part 2 here, and Part 3 here.

Every medical specialty has its own organization (or sometimes a few competing organizations), and the main organization for internal medicine physicians is called the American College of Physicians (ACP). I think it has such a general name because it wants to be representative of internists AND also all the people who did internal medicine on their way to sub-specializing (e.g., cardiology, infectious disease, rheumatology, gastroenterology, pulmonology, . . .). Yes I know most of them consider themselves internists as well, as they should!

After the AMA (which seeks to include all physicians of every specialty), the ACP is the second-largest physician group in the U.S., which makes sense because internal medicine is the most common residency program for medical school graduates to do. I just checked the data on residency positions, and there were 8,697 internal medicine positions for 2020. The second most common one was family medicine, with 4,662 positions.

Random fact: What’s the smallest specialty in terms of residency spots? Apparently it’s preventive medicine. It had one spot available in 2020. I didn’t even know you could do a preventive medicine residency.

As a large medical specialty organization, the ACP has some significant power to wield, and that’s important because one of its main purposes for existing is to promote the interests of internal medicine physicians in the political arena. I’ve seen this in action twice in D.C., when I joined ACP members from all 50 states to meet with quite a few members of congress to advocate for specific issues.

And now the ACP has entered the realm of my primary interest by releasing a new set of policy proposals specifically talking about how to fix our healthcare system.

I haven’t read all their proposals yet–I’ll be doing that over the coming weeks–but I can guess the general approach they will take because I’ve met with enough physicians who are active in the ACP to know the general type of person who gets involved in this flavor of organized medicine and would be the ones influencing these proposals. At the risk of being accused of overgeneralizing, I will describe them as passionate and caring individuals whose morals drive them to push for social justice and to advocate for system changes especially to improve care for the underserved. Of course there are many involved in the ACP who have totally different priorities, but I would venture to say that that description applies to the most prevalent motivation to be involved.

Another reason I can guess how these proposals turned out is because I’ve heard ACP’s Senior VP over Government Affairs and Public Policy, Bob Doherty, speak a number of times, so I have a sense for what he is all about. Bob is not a physician–he’s a policy guy–and he’s articulate and impressively comprehensible when speaking on health policy issues, which tells me he knows his stuff super thoroughly. He’s been with the ACP for a long time, and I am willing to bet that, intentional or not, he had a significant influence on the shape these proposals took, if even only indirectly by being the primary person teaching ACP leadership about the issues.

My point in talking about Bob Doherty and about what kind of person gets involved in ACP leadership is to say that these proposals are going to reflect the minds of those individuals, and that they would probably have ended up looking very different if I and a randomly sampled group of regular ACP members came up with them.

It’s just interesting that now we have the second-largest physician organization essentially saying, “This is what physicians believe about how to fix healthcare.” And the rest of the country will not have any reason to question that.

So, I guess it’s time to learn what I, an internal medicine physician, believe about how to fix healthcare! There are three main papers that lay out the ACP’s proposals, so over the next few weeks I’ll take each one in turn and see what they have to offer.

Getting the Best Deal on Prescriptions Is Too Complicated Even for Me

Image credit: OnHealthy.net

I have mild persistent asthma, which means I take a daily suppressive inhaler and occasionally also need to use a rescue inhaler. I moved a year ago to a new job, but I had enough medication stockpiled that only a few months ago did I finally need to get more inhalers. You would think that, as an internal medicine physician and also a health policy researcher, I have the rare perfect skill set that would allow me to get the best deal on these medications. But you would be wrong.

I have a high-deductible health plan and haven’t made any claims this year, so I was confident that I would be paying the full price for my medicine since that’s what it says in my benefits description. And since inhalers can be expensive, I decided I should start by logging into my health insurance profile to see if they have a formulary that would list which inhalers are the cheapest.

I didn’t find a formulary. But I did find a very interesting tool that I guess is supposed to be better. It’s called “Rx Savings Solutions.” It lets me look up a medication and then shows me prices. Simple, right?

So I looked up fluticasone proprionate–not to be confused with the nasal version fluticasone proprionate, or the other fluticasone proprionates that are combined with other medicines, and good thing I know that HFA means it’s an inhaler. It said the estimated cost was $192 for a 1-month supply, but that was for a retail pharmacy. I could instead use a mail pharmacy and pay $562 for a 3-month supply (I initially didn’t notice that price was for 3 months instead of 1).

But it went further than that. It offered alternative formulations of the same medication (inhaler vs diskus, although the diskus was listed as the same price as the inhaler), and it even offered alternative medications (fluticasone furoate, beclomethasone, budesonide, . . .). I guess if you are using that tool real-time while at the doctor, that could be helpful in steering them to an equivalent but cheaper medication. But it would probably be a frustrating time-waster for the doctor!

Luckily, I was writing the prescription myself. And since I knew that any of those other medications would work fine, I felt confident. I was even savvy enough to look at the recommended dosing frequency and the number of doses per inhaler to make sure they would each last the same number of days. Yes, I was confident at this point.

Beclomethasone and mometasone were both within $1 per month of the price of fluticasone, so I just decided to go with fluticasone because that’s what I’ve been using. I selected it, which then took me to a page listing the actual prices at a variety of pharmacies. In this case, every pharmacy listed had the same price, still that $192 for one inhaler. Other medications I have searched have showed different prices depending on the pharmacy. I’ve heard of various pharmacy-specific discounts, so I wasn’t sure if I should trust the prices listed, but I wasn’t willing to call each pharmacy to ask.

But $192 seemed like a lot of money per month. Remember, I’m a young doctor paying off large debts, and also remember that I grew up in Canada where medications are cheap. So I decided to broaden my search.

I checked GoodRx. They claim they have prices that will beat my insurance plan’s prices! I’m sure they do, but in this case, the price for one fluticasone inhaler was $256 at all the pharmacies listed, so no luck there. I didn’t go out of my way to check the GoodRx prices for beclomethasone and the others, although I should have if I wanted to truly be confident I was getting the best price.

I’ve heard of Canada mail pharmacies, so then I looked into those. There are a few options, so I started checking prices on all of them for a few of my medication options and their various formulations. This took some time, and eventually I was able to find one that offered the exact same fluticasone inhaler for $35. This was a killer deal! Except there are uncertainties about if ordering meds from my motherland will get me in trouble.

Ultimately, I had run out of fluticasone and my asthma was starting to get bad, so I gave up my search for the best price and just went with what I knew I could get the next day. I called in a prescription for a fluticasone inhaler to our local Walmart. When my wife picked it up for me, she said they only charged her a $36 copay! But they had to switch it to the diskus version.

I don’t know why they didn’t charge us the full price. But I think I know why the switched it to the diskus version. Looking again at the Rx Savings Solutions website, it turns out the price listed there is $182 for the diskus (as opposed to $192 for the inhaler), but I only see that price when I search the diskus directly. If I search for the inhaler and then look at the price of the diskus in the alternative formulations section, it lists the price of the diskus as $192. Go figure.

In a way, it’s good that the cheapest price is the one any normal consumer of healthcare would have gotten. Unfortunately, that’s probably not normally the case. But any other person on my same insurance plan who needed a refill for fluticasone would have gone to their doctor and asked for a refill, then the doctor would have electronically sent a new fluticasone prescription to their usual pharmacy (having no idea whether it is the cheapest option for that patient’s insurance), and then the patient would have picked it up and paid whatever price the pharmacy requested.

Do you want to know how doctors figure out how much a medication will cost a patient? Well, the real answer is that we don’t figure it out. But for those times when a patient is requesting a price due to severe financial constraints, we call the patient’s pharmacy and have them run a test prescription. The computer then spits out how much the patient’s out-of-pocket cost will be. That’s the only way to know the actual out-of-pocket cost. Not even a pharmacist can tell you that information without running a test prescription. Can you imagine a physician really trying hard to find the best deal for a patient? They would have to call multiple pharmacies and have them run a variety of test prescriptions. That is completely impractical.

This is yet another manifestation of the despicable complexity in our healthcare system, and it wastes so much time and money of patients, doctors, and pharmacists.

Did you notice the impossible number of variables someone has to sift through to find the cheapest price for a single treatment? The insurance plan, the number of months’ worth of medication you’re buying, the outside rebate programs, the mail options (U.S. and international), the alternative equivalent treatment options, the alternative formulations for the same meds, the frequency of dosing, the search term used to find the price of a medication, and the pharmacy-specific price impacts.

There are clearly other variables I still don’t know about, which is why, even after all of that, I still didn’t know what my actual out-of-pocket cost would be.

A Solution for Coding Complexity?

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The last two weeks, I have written about the money-and-time-wasting complexities of hospital billing and inpatient provider billing. Are there solutions?

Remember, first, that to identify a solution to a problem, you have to accurately diagnose the cause of the problem. So we should back up and talk about that first.

I should give a disclaimer and say that, while I’ve read a variety of book chapters and articles talking about how our billing system evolved, I am no expert on this subject. Nor do I want to try to go into the deep billing history here. But maybe a big-picture summary will suffice.

Why would people design such a complicated system? On the provider side, the two reasons that stick out are as follows:

  1. To make sure providers are actually delivering enough care to warrant getting paid their fee. It’s trying to prevent that small minority of “innovative” providers who would cut corners in a way that isn’t necessary illegal but that would enable them to generate way more RVUs per hour than good, thoughtful, conscientious care would allow.
  2. To try to quantify differences in complexity, especially so that providers are rewarded for doing more difficult things.

On the hospital side, those same two reasons also apply, although the second one is much more relevant. There are, though, issues with the first reason as well, which is why 30-day readmission rules have cropped up.

So there you have at least a start to an understanding of why these complicated systems have evolved to what they are today. And your mind is probably brimming with solutions already based on that short explanation. For example, if most providers end up billing about the same average complexity, why not just simplify things by only having a single complexity level and trust that things will average out? Some providers will take a pay cut and some will get a raise, but most will still make the same amount of money and will save a lot of time and expense (less overhead dedicated to paying for coders to review charts, etc.). Or why not have fewer modifiers that change what DRG a patient gets assigned to? Or, heck, just fewer DRGs in general? Better yet, just have a closed integrated provider-insurer organization that can make whatever billing rules make the most sense to everyone in that organization?

We could easily come up with lots of other solutions. But remember I’m interested in fixing the whole healthcare system? Would any of these help us make progress toward actual and significant big-picture value improvements in our healthcare system? Or might they risk creating more barriers to getting to the real solutions?

Remember that my explanation of how to fix healthcare (as detailed in my Healthcare Incentives Framework) is to enable more people to identify and then choose higher-value providers and insurers. This means people need to know price and quality beforehand. (This isn’t always possible, but it is possible in more circumstances than people realize.) And when people start to know provider quality beforehand and then choose them based on that information, the issue of corner cutting by providers is greatly reduced. This would obviate the need for complicated billing requirements that are designed to make sure providers are really doing what they are supposed to do to provide good care.

But how would all those complicated documentation rules actually go away? Well, if providers start to shift to making their own prices (and insurers allow it because patients are paying most or all of the differential between provider prices), this would mean that those rules no longer apply because the providers are the ones in charge of determining how much they get paid rather than having to adhere to arcane insurer rules that dictate their fee for them.

This is probably a topic that requires further exploration another day. But my point is that all aspects of the healthcare system would change if we get more patients to make value-sensitive decisions when choosing providers and insurers.

(As a sidenote, I am sometimes asked by coworkers, “Would your solution to healthcare fix [insert specific issue here]?” And often my answer is, “Not directly.” And then I usually leave it at that because I know they don’t want 15 minutes of explanation about financial incentives and value-sensitive decisions and different types of pricing arrangements. Billing complexity is one of those issues that wouldn’t directly get “fixed,” but it would sure get better!)

In summary, the targeted easy-to-think-of solutions to all these expense-inducing coding complexities we’ve been talking about would make a difference in the problem they’re designed to solve, but remember to keep the big-picture solutions in mind to make sure any new policy doesn’t create additional barriers or detours to getting to that final destination.

A Taste of Our System’s Coding Complexity (Provider Version)

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Last Tuesday, I wrote about the complexities in hospital billing. This week, I’ll look at provider billing.

The same preface is required, so let me copy that from last week:

Any provider’s goal with billing is to bill honestly to the highest amount they can for the necessary work they’ve done. Not billing for something that we are legally allowed to bill for is leaving money on the table and unnecessarily lowers our income. So keep in mind that, when I talk about billing the maximum possible, this is an honest and appropriate goal that is very different than taking advantage of the system or committing some kind of fraud.

When I was in residency and would work in our outpatient clinic, we had coders reviewing every single note we wrote, checking to make sure our documentation supported the bill we’d submitted for each patient. Us residents would get messages from them fairly frequently (some of us multiple messages per week), asking to go back and clarify things like the name of a problem or to change the billing code we’d used. The worst was after doing a half-day of dermatology clinic, where there were also tons of little procedures that required procedure codes and different specific details in our notes to justify. One time, I remember taking more time to fix all the notes to the coder’s specifications than it originally took me to write all of those notes.

We hated these messages from coders because it was just one more administrative annoyance required of us. (The coders themselves were lovely and patient with us, but that can only make it so much better.) We’d have fairly frequent coding training sessions, which helped us do the right thing the first time a little more often, but short of dedicating a full week or more to coding training, there was no way to teach us all the things we needed to know to do everything right the first time. And every minute spent training us on billing meant one less minute training us how to be good doctors.

When I started working as a hospitalist, I had a coding training session as well. And then I, like every new hire, was on a probation period, during which time a coder reviewed every single patient note I wrote to ensure I was doing everything properly.

My first day off after starting my new job, feeling overwhelmed at all the medicine I was supposed to know, do you know what I did? I went to a public library and spent a whole day studying the pages and pages of coding requirements the coder had given me. Over the next week or so, I took copious notes, and eventually I was able to clarify things in my mind enough to feel confident. This required multiple email and phone discussions with another very patient coder. Sometimes communication was a challenge because we had to try to translate her coder’s brain and terminology to a lowly physician’s clinical brain and terminology.

I wanted to be studying medicine, but without getting the bills right, the hospital doesn’t get paid!

Do you want to hear a little of what I learned? Let me tell you. I’ll insert the five-digit billing codes next to each one, just for fun.

When a patient is seen the first time by a member of my hospitalist group (not to be confused by the first day a patient is in the hospital), we need to code for an initial encounter. There are only three levels of complexity we can use, so let me lay out the requirements to bill at the highest level (99221).

First, their level of “risk” has to be high. There’s a long list of things that qualify, such as a change in neuro status, giving them a drug that requires intensive monitoring, or a “severe” exacerbation or progression of a medical problem.

Second, they also need to have at least four problems we are treating (a max of two of them can be self-limited), or at least one new problem that requires a workup, or a new problem without workup plus at least one other problems, or just a worsening established problem plus at least two other problems.

If they don’t meet the high-complexity level based on their problems, you can instead use a points system to meet the second criterion. If you get at least four points, it counts. There is, again, a nice list of things that get you points, such as ordering or reviewing labs, ordering or reviewing imaging, ordering or reviewing an EKG, personally viewing an image/EKG, discussing results with a provider, deciding to obtain collateral information about the patient from another person, deciding to get a consultation from another provider, deciding to request records from another location, and actually getting collateral information/consultation/records. Each one counts as a point. But if you order two imaging studies or EKGs or labs, you can’t double-count. This points system is part of what explains why there are so many seemingly unusual comments in a patient’s chart, such as, “I personally reviewed the EKG.”

So, let’s say the patient qualifies for high complexity based on those first two criteria, now I need to make sure I put all the other information in the patient’s note that will allow me to bill to that level. This includes at least four details of history from the patient (there is a specific list of what qualifies, but it includes the location of a symptom, its quality, severity, duration, timing, context, . . .), at least one symptom question about at least 10 different organ systems, and at least one thing about the patient’s medical history, family history, and social history.

Then, I need to document an exam with at least one thing in eight different systems. Or, if I’m a specialist focusing on one specific organ, I need to document at least eight things about that one organ. And some things don’t count. I thought I could use “Head/eyes/ears/nose/throat: atraumatic” as one of my systems, but it turns out I can’t. But I can instead say “Head/eyes/ears/nose/throat: Vision grossly intact.” Physicians, even internists like me, are rarely concerned about eight different body systems at the same time, so we have learned to say things to check off the eight systems without having to do too much extra work. For example, my standard physical exam includes the very useful “Dermatologic: No rash noted” because, when I’m looking at the patient’s face and belly and legs, I didn’t note a rash. My standard exam also includes the very useful “Psychiatric: Normal affect” and “Genitourinary: No Foley.”

Now you know the requirements to bill for a high level of complexity for an initial care episode. If I don’t meet every single one of those requirements, I can’t bill at that level, and I need to see what lower level my documentation would qualify for.

There’s another set of requirements for moderate level (99222) and low level of complexity (99221), each with their own list of what constitutes the right level of risk, the right number of problems or points, and the right number of history and exam details. And there’s yet another set of requirements for all three levels for subsequent encounters (99231, 99232, 99233). And another set of codes if the patient doesn’t qualify as sick enough to be considered an “inpatient” but is only here “under observation” (99218, 99219, 99220).

But you could bill for time instead of complexity! In this case, the documentation requirement is much simpler. You just have to have a statement in your note that tells how much time you spent on the patient (but time spent doing procedures counts separately), and at least 50% of it has to be related to direct patient care and also coordination of care. You also have to give some details about the content of what took longer than would have been otherwise justified based on the patient’s level of complexity. And you need to remember that, to bill for a high level of complexity, you need to have spent at least 70 minutes on an initial encounter or 35 minutes on a subsequent encounter. And for a moderate level of complexity, you need to have spent at least 50 minutes on an initial encounter or 25 minutes on a subsequent encounter. And for a low level of complexity, you need to have spent at least 30 minutes on an initial encounter or 15 minutes on a subsequent encounter.

But what if the patient was admitted after midnight? That means they have already been billed for that calendar day. But if you spend at least 30 minutes on the patient (or, if you are doing an initial admit and spend the expected amount of time plus at least 30 minutes more than would be expected), then you can bill for a “prolonged service” (99356). But you have to make sure that the total time the initial provider took plus your time is at least equal to 30 minutes plus the expected amount of time the initial provider should have taken based on the level of complexity and encounter type they billed for. This is why we have to put our time in every note, even if we aren’t going to bill for time.

And if the total extra time on the patient was at least 60 minutes, then you can add two prolonged service codes (99356, 99357), one for each 30-minute chunk. But make sure you specify how much actual face-to-face time if the patient is on Medicare, because that’s the only kind of time that counts for prolonged service codes for Medicare.

Maybe I should stop. I know everyone also wants to know the details of how to bill and properly document if a patient is admitted and discharged the same day (99234, 99235, 99236), which code to use on discharge day (99238, 99239, or 99217), when you can bill for critical care time (and what you have to document) (99291, 99292), but I’ll stop.

When I think about the cost to code this way, it’s significant. There are costs for the armies of coders reviewing providers’ notes and sending messages, costs in doctors’ time (learning this stuff, responding to coding queries, getting refresher trainings, documenting so many things that are irrelevant to medical communication), costs in software to make sure we are all billing to the maximum allowable, costs in consultants and administrative personnel analyzing our coding data and figuring out how to optimize it, and (most important of all) costs in quality of care because doctors have to spend so much time on this rather than learning more medicine.

I talk sometimes about despising the complexity of our healthcare system and that it is a major component of its crazy high cost, and billing complexity is one of the things I am referring to. I hope now you can see why.

And since I like thinking and writing about solutions, so I’ll give some thoughts on that next week.

A Taste of Our System’s Coding Complexity (Hospital Version)

I work as an inpatient internal medicine physician, usually referred to as a hospitalist. People sometimes hear about how complex billing and coding are in our system, so today I’d like to give a taste of my experience with this.

Before I explain this, I should be clear that any provider’s goal with billing is to bill honestly to the highest amount they can for the necessary work they’ve done. Not billing for something that we are legally allowed to bill for is leaving money on the table and unnecessarily lowers our income. So keep in mind that, when I talk about billing the maximum possible, this is an honest and appropriate goal that is very different than taking advantage of the system or committing some kind of fraud.

Each day when I see a patient, I am expected to write a daily progress note. Originally, these were strictly for communication with other caregivers so everyone would know what’s going on with the patient and nurses would know what needed to happen for patients. Then EMRs came along, the primary motivation behind them being that it would streamline the process of sending bill to insurers. Helping with the clinical care of patients was a secondary purpose. I’m not sure whether the data-capturing ability of EMRs allowed coding policies to become more detailed/specific/complex, but it sure seems that way, as you will see.

When a patient is in the hospital, the hospital charges a bill and each doctor who sees the patient charges a bill. This week, I’ll focus on the hospital side.

Hospital contracts with insurers are mostly based on DRGs, which stands for “diagnosis-related groups.” Essentially, the hospital sends to the insurer a list of the diagnoses that were treated during the hospitalization, and then, based on that list, the patient is assigned to a certain DRG, and the hospital gets paid the standard amount for that DRG. There are a bunch of little adjustments here and there for location, hospital type, etc., but that’s the essence of it.

As a hospitalist, I am usually the primary doctor over a patient’s hospitalization, so making sure all the right diagnoses are listed in the patient’s chart is super important if I want the hospital to get paid for the work we did. It would be nice if there were just a few different DRGs, but there aren’t. There are 1,000 arcane rules that make a big difference in which DRG the patient ends up getting assigned to, which means trainings about how to add the right DRGs take up a significant percentage of hospitalist meetings (as opposed to trainings on how to be better doctors!). They give us pamphlets full of suggestions on how to correctly add problems to the patient’s problem list. Here’s part of a single page of one of these multi-page pamphlets:

When I am working in the EMR, we also have some built-in software through which coders somewhere who are reviewing every single patient’s chart will send me messages (“coding queries”) with suggestions about which additional problems to add or how to make diagnoses more specific to get the patient lumped into a higher-paying DRG. It’s implemented very well, but it definitely disrupts my workflow.

Another issue is that sometimes these DRGs use old diagnostic rules. For example, anytime someone has at least two of the following–high heart rate, fever, high white blood cell count, high respiratory rate–there is a sepsis alert that tries to get me to add that to the problem list (and make sure you specify what the source is, which organ system is involved, and how severe it is!). The problem is, that’s the old definition of sepsis that has been proven to be less useful than newer definitions. So sometimes my clinical judgment says a patient doesn’t have sepsis, but I have to remember the old definition to make sure I add it to the problem list where that definition fits.

And don’t worry–if I forget to add something and the patient gets discharged, those coders can always track me down and have me sign forms that go into the patient’s chart stating there were other problems that were not added but that we took care of in the hospital.

All of this results in many patients having problem lists in excess of 30 items. It’s completely overwhelming! These lists are automatically inserted into every note I write and form the template for writing my problem-based assessment and plan, which means my assessment and plan looks incredibly long and interferes with communicating to other caregivers what’s important and what’s actually going on with the patient.

Not only is the list burdensome because of its length, but also the names of these problems are often less useful. If I wanted to, I could take the time to go and manually change them in the patient’s chart before generating my daily progress note, but then it’s that much extra administrative time I’m taking. And, if I manually change the problem name, now the name is different than the underlying problem code’s name, which may mean I or a colleague who takes over the patient’s care will not notice if the problem code becomes inaccurate or not specific enough, causing further confusion and messages from coders.

Oh, also this all supposes that the patient is sick enough to be considered an “inpatient” when they are here. If they aren’t sick enough (based on a whole different set of criteria), then they are only here under “observation,” and DRGs don’t apply, so the patient is billed for each individual service done.

So, that’s just a taste of the hospital side of billing. Next week, I’ll give you a taste of how provider billing works.

The Two Steps to Fixing Healthcare

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Photo by Linus Pettersson on Pexels.com

I focus mostly on aligning financial incentives to fix the healthcare system. But what about QI and implementation science–how do those fit with my interest in aligning incentives?

If you’ve ever been to an Institute for Healthcare Improvement conference, you have seen thousands of passionate individuals finding ways to improve healthcare, both from the provider level and the insurer level. I have sat through so many presentations by these innovators explaining their impressive improvements, and, in addition to being impressed at their work, I am almost always thinking, “They are working at odds with their financial incentives!” In other words, their QI efforts–were it not for them almost always being supported by grant funds–would be costing their organization a lot more money than the organization would ever make from those improvements.

Now, to be clear, making more money is not the main purpose of QI projects! They are improving patients’ lives, and that’s where the focus should be. But do you ever wonder why so many of those successful improvements don’t spread like wildfire through the country’s healthcare organizations?

The reason is because, while all good healthcare administrators truly want to improve the value their organization delivers to patients, they cannot be expected to add such costs to their balance sheet. There are too many uncertainties about reimbursement and government policy changes to take risks like that! And if they go bankrupt, they’re not doing patients any good.

An example from my residency clinic is having social workers full time in the clinic. We cared for many of the vulnerable populations of our city, and those social workers made a huge difference in many of our patients’ lives. But, were it not for grant money to pay those social workers, they would have been costing the clinic quite a bit of money (their salaries) without bringing any extra money in. This is one of thousands of examples in healthcare of what I refer to as “value improvements at the expense of profitability.”

Now, what if our healthcare system were designed in a way that, any time a provider or insurer improves value, they end up making more money as a result of it? What would happen to all those successful QI projects? They would disseminate like crazy. That is my goal.

This is why I think my work to align financial incentives in healthcare is actually the most important work the QI crowd could ask for right now. It’s Step 1 of fixing the healthcare system. And then they get to do Step 2 by responding to those good incentives by innovating in ways that improve the lives of the people they serve.